Chapter 15 –

Organization
Structure
Robbins and Judge
Organization Behavior
15 Edition
The material used in producing this presentation
derived from the book. Several examples has been
added to enrich the student’s understanding
 Introduction

 “We have not achieved the success that we must

because of severe limitations on our organization’s
ability to execute in a timely manner.”
 ‘Design alterations to a car required review by as many
as 70 managers, with decisions taking months & years’
 ‘Ask approval from many sources as possible’

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 Introduction

 Conversation in an organization:
o Nothing happens in this place until we produce something!
o Nothing happens until we design something!
o Nothing happens here until we sell something!
o It doesn’t matter what you produce, design, or sell. No one
knows what happens until we tally up the results!

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 Introduction

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 What is Organization Structure

 Definition : the formal division, group, & coordination

of job tasks
 Six key elements in designing the structure:
o Work specialization,
o Departmentalization,
o Chain of command,
o Span of control,
o Centralization and decentralization,
o Formalization
 Is it possible to form one structure which accommodate all
need?
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 What is Organization Structure

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 Work Specialization

 The degree to which a tasks are divided or subdivided

into separate jobs
o Makes efficient use of employee skills
o Create productivity
o Increases employee skills through repetition
o Less time between-job downtime increases productivity
o Easy to find & train people
o Encouraging invention or specialized equipment
 Sometime create greater economies and efficiencies –
but not always… what do you think?

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 Work Specialization

 Specialization can reach a point of diminishing returns

 What are the alternatives?

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 Departementalization

 The basis by which jobs are grouped together

 Grouping Activities by:
o Function (engineering, accounting, manufacturing, personnel,
and supply specialists)
o Product/Service (Sunsilk, Clear, Close-up, TAKA, Simponi)
o Geography (West Java, Papua, Bandung, Surabaya)
o Process (penerimaan berkas, pemeriksaan, pembayaran)
o Customer (Consumer, retail, corporate, distributor)

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 Chain of Command

 The unbroken line of authority that extends from the

top of the organization to the lowest which clarifies
who reports to whom
o The Authority
› The rights inherent in a managerial position to give orders and to
expect the orders to be obeyed
o Unity of Command
› A subordinate should have only one superior to whom he or she is
directly responsible
 Explain what is gonna happened if you break the
chain of command?

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 Introduction

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 Span of Control

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 Span of Control

 The number of subordinates a manager can efficiently

and effectively direct
o Wider spans of management increase organizational
efficiency
o Narrow span drawbacks:
› Expense of additional layers of management
› Increased complexity of vertical communication
› Encouragement of overly tight supervision and discouragement of
employee autonomy
 What are the advantages/disadvantages regarding
the wide/narrow span of control?

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 Centralization/Decentralization

 Centralization
o The degree to which decision making is concentrated at a
single point in the organization.
 Decentralization
o The degree to which decision making is spread throughout the
organization, closest to the ‘action’
 What are the requiremen of the employee, if you
want to apply the decentralization model?

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 Formalization

 The degree to which jobs within the organization are

standardized.
o High formalization
› Minimum worker discretion in how to get the job done
› Many rules and procedures to follow
o Low formalization
› Job behaviors are nonprogrammed
› Employees have maximum discretion, allow improvization

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Shwedagon Temple, Yangon
Myanmar, May 2011

ORGANIZATIONAL DESIGN
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 Simple Structure

 A structure characterized by a low degree of

departmentalization, wide spans of control, authority
centralized in a single person, and little formalization

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 Bureaucracy

 A structure of highly operating routine tasks /

standarized achieved through:
o Specialization,
o Very formalized rules and regulations,
o Tasks that are grouped into functional departments,
o Centralized authority,
o Narrow spans of control,
o Decision making that follows the chain of command

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 Assessment of Bureaucracy

 Strengths
o Functional economies of scale
o Minimum duplication of personnel and equipment
o Enhanced communication
o Centralized decision making
 Weaknesses
o Subunit conflicts with organizational goals
o Obsessive concern with rules and regulations
o Lack of employee discretion to deal with problems

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 Matrix

 Matrix Structure
o A structure that creates dual lines of authority and combines
functional and product departmentalization
 Key Elements
o Gains the advantages of functional & product
departmentalization
o Coordination of complex & interdependent activities
o Information quickly reach the people who need it
o Breaks down unity-of-command concept
 What are the disadvantages of the matrix stucture?

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 Matrix

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 Virtual Organization

 A small, core organization that outsources its major

business functions
 Highly centralized with little or no departmentalization
› Provides maximum flexibility while concentrating on
what the organization does best
› Reduced control over key parts of the business
 Based on principle that if you can rent it why you buy it
 Example : MGM, Universal Studios
 It outsources almost everything: manufacturing,
procurement, shipping, and quality control
 Manager spend their time coordinating & controlling
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 Virtual Organization

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 Boundaryless Organization

 An organization that seeks to eliminate the chain of

command, have limitless spans of control, and replace
departments with empowered teams
 T-form Concepts
o Eliminate vertical (hierarchical) and horizontal
(departmental) internal boundaries
o Breakdown external barriers to customers and suppliers

 Strategic Alliance, collaboration

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 Downsizing

 Organizational goal’s is to forms & improve agility by

creating a lean, focused, and flexible organization.
 Downsizing is a systematic effort to make an
organization leaner
o Closing locations
o Reducing staff
o Selling off business units that don’t add value

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 Downsizing

 The effect :
o Employee attitude
o Stress
o Insecurity
o High turn over
 How to minimize”
o Communication
o Participation
o Assistance
 What is the meaning of downsizing and when it happened?

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 Extreme Model of Organization Design

 Mechanistic model
o Characterized by extensive departmentalization, high
formalization, a limited information network, and
centralization.
o Synonymous with the bureaucracy, highly standardized
processes for work, high formalization, and more managerial
hierarchy.
 Organic model
o Flat, uses cross-hierarchical and cross-functional teams, has
low formalization, flexible practise, possesses a
comprehensive information network, relies on participative
decision making.
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 Extreme Model of Organization Design

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Shwedagon Temple, Yangon
Myanmar, May 2011

STRUCTURE DIFFEReNCES
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 Strategy

 Innovation Strategy
o A strategy that emphasizes the introduction of major new products and
services
 Cost-minimization Strategy
o A strategy that emphasizes tight cost controls, avoidance of unnecessary
innovation or marketing expenses, and price cutting
 Imitation Strategy
o Seeks to move into new products or new markets only after their viability
has already been proven

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 Strategy

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 Organization Size

 As organizations grow, they become more mechanistic,

more specialized, with more rules and regulations

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 Technology

 How an organization transfers its inputs into outputs

o The more routine the activities, the more mechanistic the
structure with greater formalization
o Custom activities need an organic structure

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 Environment

 Institutions or forces outside the organization that

potentially affect the organization’s performance
 Three key dimensions:
o Capacity
› The degree to which an environment can support growth
o Volatility
› The degree of instability in the environment
o Complexity
› The degree of heterogeneity and concentration among
environmental elements

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 Environment

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 Organization Design
& Employee Behavior
 Impossible to generalize the perfect organization
structure due to individual differences in the employees
 People seek and stay at organizations that match their
needs.

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 Organization Design
& Employee Behavior
 Findings on organization researchs:
o Work specialization contributes to higher employee
productivity, but it reduces job satisfaction.
o The benefits of specialization have decreased rapidly as
employees seek more intrinsically rewarding jobs.
o The effect of span of control on employee performance is
contingent upon individual differences and abilities, task
structures, and other organizational factors.
o Participative decision making in decentralized organizations
is positively related to job satisfaction.

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 Organization Design
& Employee Behavior

Structure impacts both the attitudes and behaviors of the people within it
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 TUGAS 1 - UAS

 Identifikasi seluruh variabel yang terdapat di dalam

Perilaku Organisasi (contoh : kepemimpinan, motivasi,
komunikasi)
 Cari skripsi dengan tema PO (perpustakaan, searching
di web, dll).
 Temukan skripsi yang menggunakan kuesioner (3
skripsi / mhs)
 Identifikasi;
o Variabel yg digunakan
o Sub variabel
o Dimensi atau indikator yg digunakan

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 TUGAS 1 - UAS

 Buat kuesioner baru dari berdasarkan pertanyaan dalam

kuesioner yang ada (hilangkan pertanyaan yang tidak
relevan)
o Jumlah pertanyaan untuk setiap variabel minimal 10 buah
 Diketik rapi disertai identitas yang jelas, diserahkan
saat UAS
 Sebutkan skripsi dan buku-buku PO yang digunakan

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